Carolinas Contractors Embrace Growth in Key Markets Amid Economic Challenges

As the construction industry navigates unpredictable economic landscapes, contractors in the Carolinas are entering 2026 with a distinct sense of optimism. According to the latest 2026 Construction Outlook released by the AGC of America, key segments such as healthcare, data centers, power, and water/sewer are driving confidence among contractors in North and South Carolina.

Key Areas of Opportunity

In North Carolina, contractors have expressed notably positive sentiments, with many anticipating significant developments in sectors like healthcare, data centers, and energy. The optimism within the healthcare domain is particularly striking, revealing a 67% net positive outlook from contractors dealing with various medical facilities. This surge in construction activities is representative of a more extensive trend aimed at enhancing services and infrastructure in response to growing demand.

Jim Rhodes, Senior Vice President at Wayne Brothers Companies, highlighted the diversification of construction opportunities across North and South Carolina. He noted, "We are seeing strong opportunities across data centers, water and wastewater, energy, manufacturing, and institutional work. There is a lot being built in North and South Carolina, and that diversity is important."

Additionally, contractors have reported impressive expectations for water/sewer (38%), hospitals (36%), multifamily residential (36%), and K–12 projects (33%). This optimistic environment is bolstered by stronger backlogs, with nearly 55% of firms expressing confidence in their bidding pipelines, alongside a robust 76% noting plans for increased hiring in 2026.

Workforce Challenges

Despite this positive outlook, contractors face significant workforce challenges. Over 90% of North Carolina respondents indicated difficulties in filling both craft and salaried positions. This scenario amplifies the necessity for ongoing workforce development initiatives and recruitment strategies to ensure the industry's future success. Rhodes remarked, "If we want to grow this industry in a sustainable way, it comes down to people. Our ability to deliver projects more efficiently and value the individuals working on them will ultimately determine our success."

South Carolina’s Optimistic Perspective

Contractors in South Carolina are also showcasing enthusiasm, particularly within the healthcare and institutional sectors. The outlook for hospital construction is remarkably strong, achieving a 70% net positive rating, trailed by data centers at 67%. Such fervor hints at a broader institutional demand, signaling continuous investments in public health and education.

Roughly 60% of South Carolina contractors are confident regarding their current backlogs and bidding pipelines, while 70% anticipate increasing their workforce in the upcoming year. However, the labor shortage is notably acute, with 95% of firms struggling to recruit for salaried positions, thereby intensifying concerns regarding labor costs and availability heading into 2026.

Southern Region Overview

Regionally, the Carolinas demonstrate substantial growth potential, outpacing several traditional markets despite overall national expectations cooling. In sectors including data centers (60% net positive outlook), hospitals (33%), and water/sewer (28%), Carolina contractors exhibit stronger confidence levels than their counterparts throughout the Southern region.

The national construction outlook has revealed a softening in expectations, with rising financing costs and workforce shortages influencing contractor sentiment. Nevertheless, the Carolinas' ability to maintain robust backlogs and continuous hiring underscores their resilience and ongoing demand for construction services. As the regional trade association representing construction professionals, the Carolinas AGC plays a pivotal role in addressing these challenges and advocating for necessary industry supports.

In conclusion, while broader economic uncertainties persist, the Carolinas' construction sector is poised for growth, driven by strategic investments in healthcare, infrastructure, and workforce development. The efforts of industry leaders and advocacy groups will be crucial in navigating the challenges ahead and fostering an environment conducive to sustained growth in the New Year.